Contract structures
Choose a solar structure by risk allocation, not a universal price winner.
Direct answer
Cash, debt, lease, on-site PPA, and virtual PPA structures allocate capital, tax benefits, operating duties, credit risk, term, and exit rights differently. Provincial availability and contract treatment vary, so no structure is the universal cost winner.
· Economics guide
Code-native diagram
Ownership risk allocation
A contract matrix compares asset ownership, capital timing, operating duty, and exit terms.
| Step | Evidence question |
|---|---|
| 1 | Asset owner |
| 2 | Capital timing |
| 3 | Operating responsibility |
| 4 | Exit rights |
Conceptual geometry only. The official source basis and verification date are listed in the evidence rail on this page.
Compare five structures on the same decision fields
Cash ownership puts the initial capital and asset control with the buyer. Debt ownership retains the asset but adds lender conditions. A lease separates equipment use from ownership. An on-site PPA sells delivered electricity under contract. A virtual PPA settles financially and does not change physical delivery by itself.
| Structure | Asset owner | Buyer capital timing | Tax and incentive access | Exit complexity |
|---|---|---|---|---|
| Cash purchase | Buyer | Upfront | Buyer subject to eligibility | Asset disposition and site obligations |
| Debt purchase | Buyer | Financed | Buyer subject to eligibility and lender terms | Debt and asset obligations |
| Lease | Lessor | Periodic | Contract specific | Assignment and termination terms |
| On-site PPA | Provider | Energy payments | Provider and contract specific | Long-term site and offtake terms |
| Virtual PPA | Generator or project entity | Financial settlement | Framework and contract specific | Market, credit, and settlement exposure |
Ontario's C-PPA framework is narrow
IESO's current corporate PPA framework applies to qualifying ICI participants and generators that meet the regulation and market-participant requirements. The official page describes the structure as typically virtual, with financial settlement separate from physical electricity delivery.
The Ontario framework does not establish national availability.
The Alberta government guide is archived
The archived Alberta guide illustrates physical and financial structures. It remains useful for contract vocabulary, but current legal, accounting, market, and tax treatment needs professional review.
Ask who carries each risk
Compare construction, performance, curtailment, operations, roof access, interconnection, electricity price, tax eligibility, credit, change of control, property sale, contract termination, and end-of-term removal.
Use one project load and production case across every bid. A lower stated energy price can conceal a different term, escalation rule, output guarantee, or exit cost.
Compare structures on the same project boundary
Cash ownership, debt-financed ownership, lease, on-site PPA, and off-site or virtual PPA should be compared against the same load, project scope, term, electricity-value method, performance boundary, and owner objectives. Otherwise the structure comparison becomes a comparison of different projects.
The owner should state whether the objective is capital preservation, long-term cost certainty, renewable-energy attributes, operational resilience, tax-benefit access, balance-sheet treatment, risk transfer, or a combination. No structure satisfies every objective equally. The decision table should show which objective each term supports and which risk it transfers or retains.
Ownership retains the asset and project risk
A cash owner funds the capital and normally controls the asset, contracts, operating decisions, and residual value. The owner also bears development, construction, performance, operating, equipment, insurance, interconnection, and disposition risk unless contracts transfer specific obligations.
Debt changes cash timing and adds lender requirements, interest, covenants, security, and default consequences. It does not remove the underlying project risk. The owner should compare debt service with project cash flow and keep tax assumptions separate from financing terms. Enerwav does not publish a financing rate or assume credit availability.
Leases and on-site PPAs divide ownership from site use
A lease can place asset ownership with another party while the host pays according to the contract. An on-site PPA generally links payment to delivered generation under defined metering, availability, pricing, escalation, term, and performance provisions. The host still needs site rights, utility approval, construction coordination, insurance, operating access, and end-of-term terms.
The contract should address underperformance, outages, curtailment, roof work, equipment removal, assignment, change of control, casualty, default, buyout, early termination, and property sale. A lower initial capital requirement is not a universal cost advantage. Long-term payments and restrictions must be compared on the same valuation basis as ownership.
Virtual PPAs add market and settlement exposure
An off-site or virtual PPA can separate the contracted financial settlement from the buyer's physical electricity delivery. IESO's current C-PPA framework is specific to qualifying ICI participants and generators that meet the Ontario regulation and market-participant requirements. It should not be described as available to every Ontario or Canadian buyer.
A virtual structure can introduce market-price basis, volume, shape, congestion, settlement, credit, collateral, accounting, attribute, term, and regulatory risk. The buyer may continue paying its normal utility bill while settling the contract separately. Professional legal, market, accounting, and tax review is required before comparing it with an on-site project.
Record the risk allocation in the term sheet
The useful comparison lists asset owner, capital provider, energy buyer, tax-benefit holder, attribute owner, performance guarantor, operations party, meter boundary, price formula, escalation, settlement point, curtailment treatment, availability, insurance, credit support, default, assignment, buyout, end-of-term condition, and site-restoration duty.
A proposal should remain review required when these terms are missing or when projected savings use a tariff, escalation, generation profile, or tax treatment that differs from the owner's baseline. The archived Alberta guide can explain physical and financial structures, but current market, legal, and accounting treatment must be confirmed.
There is no universal cost winner
Ownership can retain long-term value and tax benefits while requiring capital and project capability. A lease or on-site PPA can transfer selected obligations while creating long-term payment and site-control terms. A virtual PPA can address off-site procurement objectives while adding market settlement and credit exposure.
The decision should use project-specific prices and contract terms. Enerwav does not publish a universal price advantage, promise provincial availability, or rank counterparties. If a current proposal is unavailable, the appropriate output is a qualitative risk comparison and a list of terms required for a later financial model.
Confirm that the structure is actually available
A structure described in a guide may not be offered for the site, project size, credit profile, province, utility, or schedule. The owner should obtain current proposals and confirm the legal and market path before assigning a price or risk transfer to that option.
Unavailable options remain excluded from the priced comparison.